South Korean E-commerce Giants Slip into Crisis Over Unpaid Vendor Bills

Two South Korean e-commerce platforms owned by Singapore-based Qoo10 are facing a crisis due to missed vendor payments. Authorities have launched investigations, and multiple vendors and customers are cutting ties and demanding refunds. Qoo10 attributed the issue to a payment system glitch, pledging to resolve it by July’s end.

Two South Korean e-commerce platforms owned by Singapore-based Qoo10 slipped deeper into crisis on Friday after failing to make payments to vendors, with companies cutting ties and irate customers thronging their offices demanding refunds.

A day earlier, South Korean authorities launched an investigation into Seoul-based TMON and WeMakePrice due to missed payments. WeMakePrice had unpaid bills to nearly 500 vendors worth a combined 36.9 billion won ($26.6 million) as of July 11, the Financial Supervisory Service (FSS) has said. It is trying to ascertain the current total amount of unpaid bills for both e-commerce units.

Qoo10, which is backed by private equity firm KKR according to its website, did not respond to a Reuters request for comment on Friday. Last week, it said the issue was triggered by a July 8 glitch in its payment system that affected 500 vendors selling on WeMakePrice. The platform had resumed payments which should be completed by the end of July, it added.

Angry vendors included InterparkTriple, which provides online travel and ticket booking services. It said in a statement on Friday it had terminated contracts with TMON and WeMakePrice as it had not been paid. SoftBank-backed Yanolja, an accommodation and travel platform, has informed consumers that accommodation packages bought through the sites from July 29 onward would not be honoured.

The government said on Friday it was monitoring the situation closely. Qoo10 acquired TMON, which it wholly owns, in 2022 and WeMakePrice a year later in 2023. It holds a 72.2% stake in WeMakePrice, the FSS said.

Qoo10, which also has operations in Japan, China, Hong Kong, Malaysia and Indonesia, was founded in 2010 by a South Korean national, Ku Young-bae. He also founded South Korean e-commerce platform Gmarket, which was sold to eBay in 2009. Local media showed lines of customers waiting outside TMON's and WeMakePrice's offices. Officials at the companies were taking down their names and bank details as they promised to return the money, they reported.

($1 = 1,385.5500 won)

(With inputs from agencies.)